18/08/2017

The Gift of Financial Security: Real Estate!

By now, it’s no secret that investing in property is a responsible and lucrative move to make, but almost no one would think that gifting a college-aged child with such an investment would be responsible or lucrative in the slightest– you’re going to trust the person who probably doesn’t even know how to do their own taxes with A HOUSE?! ARE YOU CRAZY?!

However, such an investment could actually be used as a tool for education, financial independence, and more. Here are the reasons why you should consider gifting a property to your college-aged child:

Guaranteed Housing

Housing options in college are notorious for being dilapidated, poorly maintained, and ergo, often times dangerous; additionally, rental properties are growing more scarce as property values skyrocket, so affordable housing is often out of reach for many students. When you gift your collegiate a property, you are ensuring they have steady, safe and dependable housing so you can rest easy. This is a good way to take the guesswork out of the process. Additionally, you are able to set a higher standard of living for them from early adulthood– sure, let them deal with the dorms for a year or two, and learn about interpersonal conflict resolution firsthand, but don’t take for granted the learning opportunity that comes with being a first-time homeowner. Show them that they don’t have to resort to inflatable furniture and bachelor/ette pad conditions forever, as long as they’re willing to set themselves to a higher standard!

Immediate, Passive Income

The pressure to secure a well-paying job immediately after graduation weighs heavy on many soon-to-graduate college kids. If you can swing the cost, such a gift to your child can very well turn into an immediate and steady source of income during and after your child graduates. For example, if your child has roommates, they can collect rent and decrease their mortgage costs. Moreover, once your child personally vacates the property and fills it up with new renters, your child can turn a profit this way. We call this “passive income” or, less formally, “mailbox money,” because they can count on regular rent payments to funnel in with minimal overhead.

Such a gift is a surefire way to take the pressure off you and your kid as graduation and a career looms.

Educational Resource

Beyond the money-making possibilities associated with the gift of property, it may also serve as a tool for educational lessons. This is to say that once your child has to deal with such a massive responsibility on their own, it forces them to learn quickly. They must learn how to maintain their asset and keep it up for future profit opportunities. They’ll learn pretty quickly the requirements for HOAs and city standards, as well as (hopefully, fingers crossed,) how to diagnose unexpected expenses early. It will be up to your child to act as the landlord and to maintain the state of their property. In short, it will be up to them how much money they can actually accrue from your gift.

If you have the means to make it happen, you won’t regret this investment for your collegiate sprouts! Aren’t you so proud of the people you’ve raised? I know we are 🙂